Management and Innovation for a Sustainable Built Environment
20 – 23 June 2011, Amsterdam, The Netherlands
ISBN: 9789052693958
MARGINAL ABATEMENT COST CURVE FOR CO2 EMISSIONS IN THE MULTYFAMILY HOUSING SECTOR WITHOUT OR WITH ENERGY EFFICIENY BARRIERS
SYLVAIN LAURENCEAU
researcher, CSTB. French.
CÉLINE VARENIO
PhD student, LEPII-EDDEN and CSTB. French.
Abstract:
First aim of this article is to estimate the CO2 emissions cuts available in a given building stock.
According to our methodology based on a sharp segmentation of the park and a close estimate of
refurbishment actions’ price and impact on the energy consumption we were able to assess the
Marginal Abatement Cost Curve of CO2 emissions reduction for multi-family building stock in the
local area of Grenoble. CO2 emissions from this stock can be reduced by 72% with casual
refurbishment actions. The potential decrease in annual CO2 emissions reaches300 000 tons.
Surprisingly, 92% of the potential decrease is hold by actions that are profitable for a purely
rational inhabitant.
Based on those results the second aim of this article is therefore to understand the barriers that
prevent housing from implementing refurbishment actions. A case study based on 40 multi-family
housings points out liquidity constraints, poor share of homeowners, decision-making in coownership and inconvenience as the four main barriers. To integrate those barriers to our model
we reduced inhabitants’ time horizon and add a fix cost to each refurbishment action. If a
reduction in inhabitants’ time horizon is not sufficient to explain the poor rate of refurbishment
actions observed in the area adding a fix cost of € 15 000 per building is enough to explain them.
Keywords: thermal rehabilitation, local climate plan, barriers to energy efficiency, Marginal
Abatement Cost Curve
ACKNOWLEDGEMENTS
This work was done in the frame of the ITEAC project (.i.e. “Integrated Territorial Economic
Appraoch for Climate”) which aims at gathering methods, data and thinking in order to build a
local climate plan. The purpose is to assess, in a bottom-up perspective, the potential and the cost
for the reduction of CO2 emissions for three sectors: transport, building and energy production
and supply. A large part of our work relates the first results for the building sector, made in
collaboration with ENERDATA. So, we would like to thank Brieuc Bougnoux (Enerdata) and all
the researchers linked up with the ITEAC project: LEPII-EDDEN, IDDRI, ENERDATA,
VEOLIA, PACTE.
We are especially grateful to Aurélie Tricoire (CSTB) for her helpful comments and discussion.
INTRODUCTION
Since the implementation of the first measures for energy saving and climate preservation, the
building’s energy efficiency is becoming a core issue in the climate and energy policy
orientations, at the worldwide, European, national or local level. Indeed, this sector represents a
large potential for energy savings and CO2 emissions in the perspective of the implementation of
cost effective measures (Price et al, 1998, OECD, 2003, De la Rue du Can and Price, 2007,
Levine et al., 2007, Ürge-Vorsatz and Novikova, 2008, IEA 2008).
The European Union set up three major directives during the last twenty years aiming at
encouraging the Member States to apply minimal requirements on energy performance for the
new and existing buildings. The Member States transposed these directives in national law by
setting up action plans in order to achieve reducing targets in energy consumptions and GHG
emissions.
In France, within the framework of environmental regulation (called the “Grenelle for
environment”), a “Grenelle Building Plan” was created with the goal to cut down by 38% the
energy consumption to 2020 in existing buildings and by 50% the GHG emission to 2050. It aims
in particular at Renovating 400,000 housings each year from 2013 to 2020.
In this context, the forecasting models at national level provide key elements for reaching goals
such as the “Grenelle Building Plan” ones (Traisnel et al., 2010) as they allow analyzing/testing
the public incentives (Giraudet et al., 2011). However, the mobilization of local authorities on the
energy savings issue in housing is getting stronger (Bailey 2007, Wheeler, 2008). The built up
area, which get involved in the Territorial Climate Plan implementation, also enclosed the
Grenelle targets regarding this sector in their area. To reach this targets, they use their
competences (Housing, town planning etc) to move their territory toward energy efficiency and
also provide incentives (financial and non-financial) (IAE-OCDE, 2005, Mckinsey 2008, Criqui
et al. 2010). Indeed, the mobilization of local authorities on this issue is fundamental because the
localization and the context in which buildings were built play a role on there energy efficiency.
That is why our work aims at assessing, at a territory scale, with a bottom-up approach, the
environmental and economic impact of technical solutions for rehabilitation and at evaluating the
cost of reduction of CO2 volume. We focus on CO2 because in the household building sector, this
gas represents almost the whole of direct emission of GHG. We produce a marginal abatement
cost curve that shows a lot of cost-effective thermal refurbishment measures.
We deal also with the issue of barriers to energy efficiency, in going by an empirical study of
multi-family buildings in Grenoble area. We modify our initials assumptions to take into account
the two mains barriers identified in this study and produce a new abatement cost curve.
In a first section (§ 0, p.3), we present the main criteria to carry out a relevant segmentation in
order to study, from a technical point of view, the building refurbishment, i.e. the type of housing
(multifamily apartments), the year of building’s construction and the energy source used for the
heating system. The criteria selected to carry out a segmentation of the park determine the
business as usual scenario of the energy consumption and CO2 emissions of the existing housing.
In a second section (§ 0, p.5), we come back on the principal technical solutions currently
available to reduce building energy consumptions. We observe, for a standard case, the impact of
these various solutions on energy consumption and CO2 emissions.
In a third section (§ 0, p.7), we show the economic impact of these various solutions by
analyzing their profitability, through indicators such as payback period, net present value and cost
of an avoided CO2ton. These estimates allow treating on a hierarchical basis the solutions
according to their technico-economic effectiveness.
In the fourth and last section (§ 0, p.10), we deal with the issue of the barriers to energy
efficiency, by identifying them, starting from an empirical study. We observe then the impact of
the modification of the assumptions concerning present preference of the households (by
reducing the payback time) on the profitability and on the cost of the CO2 avoided of the
technical solutions.
THE SEGMENTATION OF THE HOUSING PARK
We deal only with multifamily apartments and we hold two main criteria: the year of construction
of the buildings and the energy source used for the heating system. We also take into account
climatic data, characteristic of the studied zone.
The building’s age
The date of construction makes possible to provide key information on materials used for the
construction and the thermal characteristics of the building (Table). The delimitation of each
period can be done according to:
- Great historical periods marking the urban history such as the Revolution, wars, the Thirty
Glorious Years (i.e. the French economic welfare between 1945 and 1975), the oil crisis,
etc.
- Modifications of urban policy such as the policy of the post-war period, the stop of the
construction of towers blocks etc
- Changes of constructions regulation and standards which followed since 1975.
Period
of Context
construction
Period
Before 1945
“Haussmannienne”,
no thermal regulation
(RT)
Post-war period, lot of
1945-1974
construction.
no RT
Oil
crisis
which
1975-1981
induces the 1st RT
(1974)
Building materials
Energy
performances
Depend on the areas (local Weak
materials)
Mainly stone and brick
Thin walls, in concrete without Very weak
insulation, no double glazing
Emergence of prefabricated
systems, beginning of walls
insulation, ventilation system
etc.
nd
2 RT (1982)
Smaller
buildings,
1982-1999
generalization of double glazing
and wall insulation, beginning of
materials
certification,
beginning of old building’s
refurbishment
3rd and 4th RT (2000 Reinforcement
of
wall
After 2000
and 2005), (RT 2012 insulation, reduction of heating
forthcoming).
needs,
increase
of
the
equipments’
energy
performances ; creation of new
labels for buildings’ certification
Table 1: Thermal characteristics of the buildings per period of construction
Weak_averag
e
Average
strong
The information provided by the last census of the French national institute of statistic and
economics studies (INSEE), makes possible to carry out a segmentation of the housing stock on
the Grenoble area according to the period of buildings construction. It appears that among the
166,311 housing in this area (including 82% of multifamily apartments), 101,744 housings (61%)
were built before 1975 and 76,553 (46%) between 1945 and 1975 (information collected by
Enerdata, in the framework of ITEAC project).
The large part of old housings, built with materials and techniques used between 1945 and
1974, shows an important potential for energy savings on this territory.
Heating system
The energy source (gas, fuel, heating network, electricity) and the mode used for heating (central
or individual) have an impact on energy consumption. The gap between energy consumption
generated by gas and the one generated by electricity is explained mainly by the fact they are
expressed in primary energy (ep) which includes the energy lost between the energy production
and the supply of energy in the buildings (energy actually used by consumption). The conversion
factor from final energy to primary energy is 1 for all fuels (here, fuel and natural gas) and 2.58
for electricity, in order to take into account the output of electricity production and transmission.
This factor of 2.58 corresponds to an international convention. It aims to compare energy
consumptions according to the various sources used. In France, a controversy exists about this
factor because electricity is produced mainly with nuclear power plants (between 70% and 90%)
and with hydroelectricity and this factor is thus suspected not to reflect reality by exaggerating
the losses related to the production and transport. However when demand peak occurs, the
production is done starting from fossil energy (either in France by historical producer EDF, or in
another country like Germany which exports it in France). By convention, we preserve this factor
of 2.58 and tackle the question of the energy consumption of the residences in primary energy by
preoccupations with coherence with the thermal regulation.
Expressed in final energy, the residences heated with electricity are less energy consuming than
those heated with other energetic sources. We chose to express consumption in primary energy
because the electricity production and transmission are directly related to the demand. On the
other hand, expressed in CO2 emitted, emissions are more “favorable” to electricity, at least in
France, because of the large share of the nuclear power in the electrical production.
Assessment of consumption by segment: example of the Grenoble area
In crossing energy consumption by segments resulting from theoretical simulation, with the
number of multifamily apartments per segment in the Grenoble area we can (i) estimate energy
consumptions and the total CO2 emissions of the multifamily housing park and (ii) identify the
segments which represent the main potential of reductions.
On the figure above, it clearly appears that the buildings from 1945 to 1974 produce the most
significant share of energy consumptions and CO2 emissions.
This is explained on the one hand because this segment represents the largest number of housing
in this area but also because, as we explained in section 1, building from this period have bad
thermal characteristics and thus large energy loss.
But, the high share of building built in this period (46 % of the total park of multifamily
apartments) can’t by itself explain the 63% of CO2 emissions. Indeed the gap between CO2
emissions (63%) and energy consumption (56%) is explained by the energetic mix in each period.
For instance, the buildings build before 1945 are more heated with electricity (approximately
43%) than those of 1945-1974 (approximately 14%) which are mainly heated with gas (57%).
The segmentation per construction and heating energy mode enables us to draw a representation
of multifamily park and to identify the segments on which it is necessary to first operate for
thermal refurbishment. It appears that buildings built between 1945 and 1974 are those on which
it is most relevant to act because they have a large potential of reduction.
The determination of the energy consumptions and CO2 emissions and the identification of the
segments which have an important potential for reduction are only the starting point of our study.
The final objective of this part is to evaluate the economic impact and environmental various
technical solutions.
TECHNICAL SOLUTIONS FOR THERMAL RENOVATION
A broad panel of current technologies exists to carry out energy savings allowing smaller energy
consumption than standard practice (Novikova, 2010). These technologies relate to various
solutions such as insulation (of walls, roofs, floors etc), improvement of heating system
performance, ventilation system. Technical solutions identified here only deal with the reduction
of heating consumption. Moreover, we chose “ambitious” measures because of the long lifespan
of the equipment in the building, and when heavy work is undertaken (like external wall
insulation or boiler replacement), it is unlikely that they are reiterated quickly. This works are
called “no regret measures” because it is more efficient to implement them in one time and if
retrofit measures are coupled with general refurbishment, it represents a win-win opportunity
(Petersdorff et al., 2004)
Insulation
The energy losses due to bad walls and windows insulation affect the thermal characteristics of
building. If the shares vary according to the date of construction, the main loosing area is often
the same: walls, windows and joineries.
- External walls Insulation: it is still poorly developed in France (Orselli, 2008). However,
the restoration of the external wall is the good opportunity to add insulation (the repair of
the sealing must be carried out every 20 years. This operation can be the occasion to
complete work with thermal insulation). Unlike interior insulation, it makes possible to
treat a greater number of thermal bridges, without provoking a lost of living space and
without decreasing the building inertia. It involves also less nuisances for the occupant
during the works and protects the walls against climatic risks. Several techniques of
insulation exist, the main one being the installation of an insulating material covered with
a coating. The insulators can be alveolar plastics or mineral wool. The effectiveness of the
insulation depends on thermal resistance (R) of material used.
- Roofs insulation: they are subjected to the climatic variations (such as thermal freezing,
rain, shocks etc.) which deteriorate the roofing and the tightness. The roof thermal losses
account for 9 to 11%. The roofs insulation has an important potential for energy saving
and its implementation is less heavy than wall insulation. It allows to reduce energy
consumption and to improve comfort for the inhabitants in the top floor.
- Low floors insulation: floor lead to losses from 5 to 7% for the independent buildings and
up to 9% for the joint buildings. For the apartments located at the ground floor, the floor
insulation is a source of energy savings and comfort improvement. It is possible to
insulate over or under the concrete flagstone. The choice of one or the other technique
will depend on the accessibility of the lower part of the flagstone.
-
Windows: thermal losses coming from windows can represent up to 50% of the total
thermal losses of a building. In housing, window has several functionalities: it allows
improving air quality by natural ventilation and it offers a natural lighting and source of
heat by the recovery of thermal contributions of the sun. To reduce the losses, it is
possible either to improve existing windows, or to entirely change them. First solution is
possible if original joineries are still in good condition. The second solution is
recommended when original windows are in bad conditions. The replacement can be done
either by preserving the door frame, or by replacing the complete door frame. Joineries
can be out of wood, PVC or metal. PVC framing is most widespread because it resists the
bad weather and does not require maintenance unlike joineries in wood. Metal fixed
frame (aluminum) is generally reserved for large surfaces windows.
The heating system
According to the French thermal regulation for existing building (RT ex 2005), the electric
radiators installed or replaced must be controlled by a powerful integrated electronic device, with
at least four operating process (comfort, reduced, no-freezing, stop) and must have timer if they
have other functions (blower, towels warmer etc). The standard convectors present very high
electricity consumptions. Electrics radiators (with radiant source of energy) offer more
homogeneous with low consumption. When the change of radiator is done at the same time or
after the insulation of the building, the power necessary will be lower.
Regulation and programming allow regulated heating temperature according to external
conditions and free energy contributions. A powerful electric radiator, equipped with a
thermostat, can reduce from 5 to 15% the energy consumption compared to an old convector
without thermostat.
For the boilers (individual or collective system), considerable progresses were made during the
last years. They offer a better output and thus allow reducing energy consumptions. The two
principal innovations for boiler are:
- Low temperature boilers: they have an output from 80 to 90%. They allow carrying out 12
to 15% of profits compared to traditional ones,
- Condensing boilers: they reach an output higher than the low temperature boilers thanks
to the recovery of the after-heat contained in the steam of the gases combustion which are
evacuated by the chimney. They make it possible to carry out from 15 to 20% of profits
compared to a traditional boiler. By condensing the steam of combustion gases, they
recover energy, allowing a reduction in the fuels needs. Because of their low level of CO 2
and nitrogen oxides, these boilers are also less emitting in GHG.
Ventilation system
The improvement of the ventilation system must be taken into account as soon as people want to
optimize the energy performances of the ventilation system (it is a measurement of full-fledged
energy saving, because air renewal generates a reducing in energy losses of around 30%), but
also as soon as the thermal insulation of housing is improved (in complement of the insulation).
Thus, the mechanical ventilation (MV) becomes essential to control air flows necessary to the
sanitary arrangements for households.
A system of MV makes it possible to removal the inside air of the buildings while controlling the
necessary flow. The air is introduced in frontage, circulates in the buildings then is included in the
wet parts (kitchen, bathroom) before being rejected.
With heat recovery ventilation, the extraction and the air intake are mechanized and controlled.
With heat exchanger, 90% of the evacuated hot air calories can be potentially recovered. But this
technique is less cost effective than MV, because it requires more maintenance and has an electric
consumption 2.5 times superior.
The Table 2 sums up the technical solutions that we integrate in our model for assessing reduction
potential.
Effectiveness
Solutions
Wall insulation
Roof insulation
Floor insulation
Windows
Example of technique
Polystyrene plates (15 cm, λ = 0.03)
Polyurethane plates (14 cm, λ = 0.028)
Glass wool (10 cm, λ = 0.039)
Double glazing, high quality joint, PVC
framings
High efficiency News radiators with integrated thermostat
Electric radiator
High efficiency Condensing boilers
boiler
Controlling
Mechanical ventilation
Ventilation system
flow
Table 2: Technical solutions used in the model
R=5
R=5
R = 2,6
Uw = 1.2
We choose these main options for our assessment, but several others solutions exist
(technological and non-technological), that will be integrate in our research.
ASSESSMENT OF THE TECHNICAL-ECONOMIC REDUCTION POTENTIAL
Methodology and assumptions
The aim of this section is to assess the marginal abatement cost of CO2 emissions in the multifamily building stock in a given area (the Grenoble area) according to the cost of the CO 2 ton.
The main target is to identify the refurbishment actions considering the price of the CO2ton which
make the investment profitable for society.
For every type of technical solution described in the previous section we calculate the Net Present
Value (NPV) with a discount rate of 4%. This rate is used by governmental organizations to
assess the efficiency of public investments since 2005 (revision of the actualization rate of public
investments, chaired by Daniel Lebègue, Commissariat Général au Plan, January, the 21st 2005).
We assume an increase of energy prices of 3% a year (this increase rate corresponds to the
projection of IAE in 2008 and is usually used in forecasting models).
The assumption about the technical solutions’ life time is based professional building field. We
assumed that equipments –heating and ventilation systems- have to be changed after twenty years
and the other refurbishment works have a life period of forty years.
Price of refurbishment works are based on a professional database used in building sector (the
Batiprix database), enlightened with our expertise. We decided to assess the price of
refurbishment works on marginal costs instead of total cost for wall and roof insulation. This
means that we only took into account the cost of insulator equipment and not the cost of front
refurbishment or roof waterproofing. For the other kind of work the cost of the full operation is
taken.
To assess the impact of refurbishment actions on the energy bill we used thermal simulation
software (“BAO Promodul tertiaire et collectif”), requiring an exhaustive description of the
building. This software provides two different ways to evaluate the energy consumption. The first
one is the calculus process used in the French regulation (called “TH-c-ex”) and the second one,
called below the behavioral calculus process, is closer to the German PHPP calculus process. To
get more consistent results and to have elements of comparison between those two processes we
made the estimation with both of them. After assessment, we chose to use the behavioral calculus
process, because the results are closer to the real consumptions according to the developer of the
thermal program and empirical verification. Results using THC-ex are not presented in this paper
but were done to validate the results presented below.
To describe the buildings we chose between an isolated and an adjacent configuration. We
decided to consider every building to be all adjacent both because buildings in the area studied
are predominantly adjacent and because it tends to offset the overestimation of refurbishment
actions stemming from the additive assumption described in point 0 (p.8).
Besides we assess the CO2 emission cuts stemming from the refurbishment work over the life
period. Based on the spare amount of CO2 we then evaluate the price of the CO2 ton that nullify
the NPV. This price indicates the cost of CO2 ton that would make the investment cost effective.
For example a cost of CO2 ton of €48 indicates that a household will not implement the
refurbishment measures unless he is forced to pay a fictive tax of at least €48 for every ton of
CO2 they produce.
At this point we have, for every type of refurbishment work in every segment of building, the
volume and the cost of CO2 ton avoided that make the refurbishment work profitable.
In crossing this assessment with INSEE data presented in point 0 (p.4), we can calculate the
marginal abatement cost for each segment and classify the different refurbishment work and their
global impact according to the price of ton of CO2 in order to build Marginal Abatement Cost
Curve (MACC).
In order to take into account different refurbishment packages, i.e. the combination of various
refurbishment actions on the same building, we tested two different hypotheses, one additive and
the other cumulative:
- The additive hypothesis assumes that the effects of refurbishment actions are identical in
all refurbishment packages. For example, if wall insulation reduces energy consumption
by 20% and roof insulation reduces energy consumption by 10% the package would
reduce energy consumption by 20% + 10% = 30%.
- The cumulative hypothesis assumes that the relative impact of a refurbishment action
remains constant. For example, if wall insulation reduces energy consumption by 20%
and roof insulation reduces energy consumption by 10% the cumulative effect would
reduce the consumption by 1 – (1-20%)*(1-10%) = 28%.
We tested both assumptions on a couple of cases and finally opted for the additive assumption as
it was closer to the software results for the whole package, although the impact was slightly
overestimated. The additive assumption is closer than the cumulative one as some refurbishment
actions have a synergetic effect. For example, the implementation of a sophisticated controlled
mechanical ventilation system is useless if there are high air leakages by the windows.
Mechanical ventilation and window change are therefore working in synergy. And if the complete
insulation of the building is made the power of the heating system can be lowered.
Results
According to our model, the overall CO2 emissions of multi-family housings’ heating system in
an urban area reach the level of 40,414 tons each year. To control our assessment, we compare the
initial overall CO2 emissions stemming from our model to a previous estimate made by the center
which made the emission inventory in this area (In Grenoble urban area an inventory of energy
consumption and CO2 emission is conduct by ASCOPARG. This kind of inventory is conducted
in almost all urban areas in France). With an estimated level of emissions of 370,000 tons each
year for collective housings’ heating system emission our results are closed to this estimation.
This level of emissions corresponds to a level of energy consumption of 2,469 GWh of primary
energy, about 229 kWh per net floor area square meter.
Figure 1 presents the marginal abatement cost curve taking into account energy gains over the
entire life of refurbishment actions.
As we also took into account energy consumption for domestic hot water in collective housings
with individual gas boiler, the overall CO2 emissions are a bit higher than in the previous part.
Indeed, annual CO2 emissions level including domestic hot water in collective housings with
individual gas boiler reaches 447,254 tons.
The implementation of all refurbishment actions taken into account can reduce annual CO2
emissions in the multi-family building sector by 300,000 tons. If we focus on heating system
emissions, the potential cutbacks reach 290,000 tons, representing 72% of CO2. The curve can be
broken into three distinct parts:
- The first 20% of CO2 potential cutbacks have a carbon price below €-200s
- The 72% followed lies in the €[-200; 0] range
- The last 8% have a positive price.
Marginal Abatement Cost Curve
400
200
350000
300000
250000
200000
150000
100000
-200
50000
0
0
Price of a ton of CO2 (€)
600
-400
-600
CO2
CO2tons
tonsannualy
annualyavoided
spared
CO2 tons annualy avoided
Figure 1: Marginal abatement cost curve with life cycle analysis
The reduction potential is different according to the period of construction and the technical
solutions:
- Potential CO2 cutbacks vary greatly with the period of construction: 1945-1975 buildings
account for 59%; ante – 1945 buildings account for 27% and post 1975 buildings only
account for 11%. As shown on the Error! Reference source not found., the MACC is
highly sensitive to the cost of the CO2ton when its price varies between €-200 and €-20.
48 of the 115 actions are profitable on this price range. Besides, those actions stand for
68% of the potential CO2 emissions cutback. Multi-family apartments built between 1945
and 1974 account for 44% of total collective housings in the urban area but stand for 60%
of the potential of CO2 reductions. Ante-1975 multi-family housings represent 68% of the
overall housings but account for almost 87% of the potential CO2 cutbacks. Those
buildings should clearly be the heart of a low carbon refurbishment plan.
- Refurbishment actions taken into account also have different potentialities. Equipments
renewal or installations stand for almost half of the potential, with change of boiler
accounting for 26% of the CO2 decrease and the ventilation system accounting for 20%.
Insulation accounts for the other half of the potential, divided between wall insulation 24%-, window replacement -14%, roof insulation -9% and floor insulation -7%. Roof
insulation does not account for a large share of potential reduction because of French
regulations forced to isolate the roof since 1974. The impact of equipments might be
overestimated as some collective buildings might have already replaced their boilers and
as the impact of ventilation system is very difficult to assess. Impact of floor insulation
might as well be overestimated as we assume this action to be possible in every situation.
Finally we find four main categories of buildings after our assessment of cost effective measures:
untouched (14%), poorly refurbished (i.e. with one or two actions (23%)), well refurbished (i.e.
between three and five actions (47%)) and totally refurbished (16%).
The cost of those actions is M€1,793. This gives an average price of CO2 ton avoided of €3,900.
Implication for energy policy
In France, the 2009 “Grenelle” legislation as the Grenoble Climate Plan, stands that CO2
emissions in existing buildings have to be cut by 50% until 2050. According to the results
presented in Figure 1, this goal should be achieved with a negative carbon cost of -€156 per ton.
Looking closer at refurbishment actions with the national target provides a different perspective
concerning their distribution and impact.
At this cost of the CO2 ton for ante – 1975 buildings stands for 93% of the CO2 cutbacks, divided
almost equally between the ante – 1945 and the 1945 – 1975 periods. Ante 1945 buildings now
account for 48% of the potential while they only account for 27% of the overall CO2 potential
decrease, while the impact of buildings built in the 1945-1975 period is lowered.
The price of reaching the policy target is about €375,000,000. This gives a global price of the
CO2 ton avoided of about €2,150 euro. In integrating the reduction of energy bill, the weighted
price of the CO2 ton is -€227.
The main result of this graph is that 92% of CO2 cutbacks are due to refurbishment measures with
negative CO2 cost, which means that those actions are actually profitable for society and should
be naturally implemented. Therefore there are huge lacks in our model, especially in the
description of the inhabitant behavior, we can wonder why those refurbishment actions have not
in fact been implemented for the overwhelming majority. Understanding those lacks will be the
aim of the last part of our article.
ENERGY EFFICIENCY BARRIERS
In spite of many opportunities to reduce energy consumption and CO2 emissions at low cost,
energy efficiency actions are realized at a slower rate than expected (Novikova, 2010). This is
due to various barriers such as technological, informational, market-based and behavioral (as
bounded rationality) characteristics (Jaffe and Stavins, 1994, Golove and Eto, 1996, de T’Seclaes,
2007, Gillingham et al., 2008).
A case study: a Policy for thermal rehabilitation of 40 multifamily building in Grenoble
A thermal rehabilitation plan in a district of Grenoble was launched by the city. Among the whole
technical solutions suggested, all were profitable maximum in 20 years. Moreover, in addition to
the national aids (tax credit, loan without discount rate), the city brought a help in order to reduce
the payback period. However, among the 43 buildings which had to make a renovation (for
aesthetic reasons), which could receive financial aids and which received an energy survey
financed by the city, only 22 decided to do energy efficiency works and only 2 did ambitious
works (replace the boiler, walls insulation, installation of ventilation system). The others
undertook between 1 and 3 operations.
This shows that even if some barriers are reduced, some of household do not invest in energy
efficiency.
We carried out interviews with the agents charged to contact the households and to incite them to
carry out refurbishment works, the syndics who represent 150 households and some households.
From these talks, we identified the following barriers:
- Liquidity constraints: the households do not have the possibility of releasing the funds
necessary for work or, when they have savings, they prefer to preserve them for other
uses. This shows that the households associate works to an opportunity. Among the
owners, the greatest part of them is represented either by old people or by young first-time
buyers. According to the syndics, liquidity constraint is the main barrier to invest.
- The weak share of homeowners: for the buildings we studied, less than 50% of the
household are owners of their housing. This element strongly reduces the will for an
owner to complete work because it is not him which will recover energy saving.
- The decision-making in co-ownership: the decision to complete works, in the case of the
condominiums needs a vote in general assembly. This step requires time, implication and
negotiations of the whole owners which can cause discouragement. Besides some actions,
e.g. roof or floor insulation, have different impacts depending on the location of the flat
inside the building. Splitting the cost can be very difficult in some assemblies.
- The inconvenience of the works: this barrier depends on the kind of works, but a part of
respondents pointed it out.
The difficulty is to estimate the cost of these barriers in order to determine their impact on the
potential and to see how the public authority can face them.
News assumptions and perspectives
The results we presented in the previous section are obtained by assuming no other cost than
refurbishment actions and with long term anticipation. This is the reason why the main part of
refurbishment actions is implemented with a negative CO2 price.
To take into account barriers like lack of information, short term view or liquidity constraints, we
tested two new assumptions.
First, we reduce the decision maker’s time horizon. Reducing the time horizon is a way to
account for inhabitant’s short term vision but it can also be the consequence of other transaction
costs. This modification is equal to an increasing of discount rate. Indeed, we increase the
consumer discount rate to reduce the payback period. From a social perspective a low discount
rate must be used to identify the economic potential, but from a household perspective, this rate
can represent the more or less “short-sightedness” (Frederick et al. 2002).
We find a new marginal abatement cost curve with a five year horizon in the inhabitant
estimation of the NPV (Figure 2).
Even with a five year time horizon, 43% of the CO2 potential cutbacks should be implemented
with negative cost, but potential decreases with highly CO2 price sensitive between –100 and 0.
15% of the potential cutbacks have a price below -€100 and only 6% have a price below -€140.
Price of a ton of CO2 (€)
Marginal Abatement Cost Curve
1500
1300
1100
900
700
500
300
100
-100
-300
0
50000
100000
150000
200000
250000
300000
-500
tons
annualy
spared
CO2CO2
tons
annualy
avoided
Figure 2: Marginal abatement cost curve with a five year horizon
Second, to take into account the inconvenience of such refurbishment actions we added a fix cost
to all actions. In our model the fix cost for the building is the same for every type of action,
although inconveniences stemming from refurbishment works can vary greatly. In fact, the aim of
this part is to assess the sensitivity of the MACC to the fix cost rather than trying to properly
estimate those costs.
With a fix cost for the building of €15 000 per action – being €1 071 for ante 1945 buildings and
€536 for the rest of them- only 3% of CO2 cuts are profitable for the inhabitants with a five years’
time horizon. The MACC is therefore highly sensitive to the existence of a fix cost. On the
contrary, with a fix cost of €20 000 per action for a whole building 75% of CO2 cuts remains
profitable.
A public action targeting the lengthening of inhabitants’ time horizon should therefore be very
efficient for the barriers that could be model by a fix cost. With the five year horizon and with a
fix cost of €15 000 per action, any actions nullifying this cost would lead to an annual decrease in
CO2 emissions of 130 000 tons.
CONCLUSION AND OPPORTUNITIES FOR FURTHER RESEARCH
The methodology developed to estimate initial CO2 emissions and potential decrease can be
implemented for other building stock and should be used by any authority involved in a
Territorial Climate Plan.
The first part confirms that the building sector holds a vast potential of CO2 emissions cuts and
that a large part of this potential should be reachable with no expenses from public authorities.
The originality and the main contribution of this article are to bring elements to develop a
methodology to understand why those refurbishment actions are not implemented in the real
world. The shortening of inhabitants’ horizon or the introduction of a fix cost reflecting the
inconveniences stemming from refurbishment actions are the two options explored in this paper
but other barriers could be questioned in a later work. In particular, liquidity constraint and fix
cost dependent from the type or the number of actions are possible assumptions to test. Besides,
another development of this work could be the calibration of those barriers based on case study
results.
Finally, the households support their decision to invest in energy efficiency measures on a
discriminating criteria (improvement of comfort, reduction of noisy, improvement of the inside
air quality etc) which decreased the only weight of economic criterion. In such a context, the use
of cost effective analysis is relevant to include/understand the policy guidelines and particularly
the choice of incentive tools, but it can be interesting to couple it with a multicriteria analysis in
order to better comprehend the gap between the theoretical results and the choices of households.
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